Waiting for the FTTH feasibility case in Longmont

The city council in Longmont, Colorado considers today whether to move ahead with plans to build a municipal fiber-to-the-home system. They’ll be reviewing a feasibility study prepared by a consulting company and then deciding whether to direct city staff to come up with a financing plan.

Longmont is near Boulder, in the Denver area. The city runs its own electric utility, serving about forty thousand households, and has a backbone fiber optic network that was installed about fifteen years ago to support utility operations. Since then, a handful of dark fiber customers have signed up, generating about a quarter of a million dollars a year for the city. A couple years ago, voters decided to use that money to finance connections for businesses willing to pay a connection fee that can run into thousands of dollars.

The plan that’s under consideration now would eliminate connection fees and build out the system to the entire city, homes and businesses alike.

The full feasibility study isn’t public yet, but a summary presentation has been released ahead of the meeting. The numbers indicate that the business plan is built on the assumption, drawn from a survey of 400 homes, that 36% of residents will sign up for Internet service and 20% for telephone service. No television service would be offered.

Judging from the information in the slide deck, the city would try to compete with Comcast and CenturyLink primarily on the basis of price, rather than superior service levels. Only 17% of households surveyed showed any positive desire to upgrade Internet speeds. On the other hand, 68% would be interested in switching providers in order to lower their Internet bills, which average $44 a month.

There’s no consideration given in the presentation to the inevitable competitive response from the incumbents, who are quite capable of lowering prices and leveraging telephone and, particularly, video bundles. The research shows a high degree of affinity for the city’s electric utility, but that’s a minor consideration for consumers when picking a service provider. Price, reliability and speed matter far more.

Identifying a market opportunity and successfully competing to serve it are two completely different beasts, particularly when your competition has a head start of months, if not years. I’ll look forward to reading the complete report, but I’m not impressed by what I’ve seen so far.